P Chidambaram: Indian rupee should be at 59-60 to US dollar

Sep 27 2013, 22:38 IST
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P Chidambaram P Chidambaram
SummaryCost of money in China and cost of money in India can't be same: Chidambaram

MSME sector. The RBI mandates domestic banks to set aside as much as 42 per cent of their total loan book towards PSL.

When exporters complained that there is no level-playing field for them when it comes to competing with China due to the high cost of credit here, Chidambaram said, there cannot be any comparison between the two nations as the two economies are very different.

"It is simply not possible that the cost of money in China and cost of money in our country will be the same. Interest rates cannot be equated, it's a factor cost. All factor costs all over the world are not the same.

"Interest rates are decided by the policy rates of the RBI, the cost of money to the banks and the bankers lending rate, which is why the Commerce Ministry gives subvention to certain sectors to make exports competitive," Chidambaram told exporters.

On the issue of multiple taxes that exporters and manufacturers face, the Minister said it cannot be helped as that is the nature of the Federal system.

"The states can't collect taxes and so the Centre refund. When the GST comes, then it subsumes three taxes-- excise, service and VAT. Perhaps, there is a possibility that the three taxes will be rebated for exporters. But we can't rebate you other local taxes," he said.

On a request to roll back the recent duty implementation on export of iron ore, Chidambaram said: "The margins with which the segment works and the international prices are high and hence there is no issue of rolling back the duty." Recently, the government had imposed a 30 per cent duty on iron ore exports in its bid to partially offset the trade deficit as steel imports have been on the rise of late.

For the second month in a row, outward shipments rose 12.97 per cent to USD 26.14 billion and imports dipped 0.68 per cent to USD 37 billion, in August.

During April-August, exports were up by 3.89 per cent at USD 124.42 billion, while imports too grew by 1.72 per cent to USD 197.79 billion, leaving a trade deficit of USD 73.36 billion.

The rupee's trouble began after the US central bank hinted in late May that it would stop its USD 85 billion bond buyback programme sooner than expected, which led to a flight of capital back to the US shores,

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